Short selling, also known as short selling and short selling, is a mode of operation in the stock and futures markets. When traders expect the market to fall in the future, they will sell the borrowed assets at the current price, and then buy and return them after the market falls, so as to obtain the difference profit. Most of the borrowed assets are stock index futures and futures contracts. Short selling is characterized by selling first and then buying, which is actually a bit like the credit trading mode in business.
Because the futures contract can be directly transferred to others without waiting for delivery, and the seller of the contract doesn't care who the final delivery is. As long as the money can be received, traders with speculative needs naturally perceive infinite possibilities. Take wheat futures as an example. When we are bearish on wheat futures, we only need to pay one tenth of the money to guess the price of wheat. Moreover, we can not only be buyers, but also directly sell wheat futures contracts without planting any wheat. If the wheat price falls as expected, we will buy the same futures contract to close the position, so that we can only benefit from the fall in wheat price without planting any wheat. If the price of wheat is not as good as expected, but rises, we don't have to worry about the physical delivery of wheat. Similarly, if the contract is closed, cash will also be damaged.
Short selling is often regarded as the patent of speculators, and speculation has always been a controversial term. Speculators are usually regarded as parasites in the development of capital markets. They don't create wealth, but they can profit from it. In fact, speculative trading has greatly increased market liquidity, increased trading volume and increased market participants, all of which help to ensure that the market produces the fairest price; Brokers are also happy to see people keen on speculation, because they can day trading and increase their commissions.
CAse. 1
In the actual market operation, the trader's favorite short-selling object is stock index futures. The reason for shorting stock index futures is the same as wheat, except that the underlying assets have changed from wheat to stocks. China mainland stock market is a relatively closed and administratively controlled market. If you want to short the stock index in the mainland market, the channel is relatively narrow. In addition to securities lending, if there is only one way to do the Shanghai and Shenzhen 300 stock index futures for a long time, the interest cost is very high. But Hong Kong, which faces Shenzhen across the sea, is completely different. Hong Kong stock market is a highly open and free international market. The biggest difference between the two stock markets is the investor structure. According to the latest statistics, only 27% of the trading volume of Hong Kong stock market is completed by individual investors, while the trading share of institutional investors accounts for 73%. At the same time, in the total trading volume, foreign investors account for 39%, that is to say, 40% of the transactions in Hong Kong stock market are completed by foreign investors. Therefore, it is not uncommon for Hong Kong stocks to have classic short-selling cases of domestic and foreign capital.
The most famous negative textbook in the history of Hong Kong stocks is Soros. Since1May, 1997, speculators led by Soros have designed a chain plan to attack Hong Kong by using futures spot through the interaction of foreign exchange market, stock market and futures market. Technically, Soros is "simple and rude": looking for enough funds, constantly buying stocks and pushing up the stock index. When the stock index reaches a high level, a large number of short positions are opened in stock index futures, and then all the stocks are sold, which suppresses the stock index and profits from the short positions in stock index futures. The most important thing about this operation is to take advantage of the blindness of market participants-buy with the wind when it goes up, and "tear down the wall" when it falls. Of course, Soros's every move has long been noticed by the Hong Kong government. The Hong Kong government secretly joined hands with the central authorities and defeated Soros's plot with both fists. Soros's speculative short position eventually made himself and the market lose both sides. After Soros shorted, the Hang Seng Index fell by 60%, and the wealth of Hong Kong people evaporated by about 2.2 trillion yuan. It was not until 2009 that it recovered to the level of 1994.
(Above: Soros)
Case 2
In the world-famous subprime mortgage crisis in the United States, some little-known people shorted the property market in the upsurge of buying houses with loans in the United States, and finally staged a "bad shoot". Steve eissmann is one of them. Unlike the "BadBeat" in Texas Hold 'em, which relies entirely on luck and courage, eissmann's sober mind and conscientious investigation and research have played an important role in this "short position reversal". Eissmann used to be a lawyer, but he was disbarred because of his bad temper and excitability. After that, eissmann went to Oppenheimer as an analyst. Because of his excellent ability, he quickly formed his own team in gold placer.
Some people say that eissmann is one of the few investors who saw the mortgage bubble. In fact, it is not difficult to find the mortgage bubble, and it is even harder to admit it. Eissmann's team stumbled upon something fishy about the mortgage market. They only analyzed a small part of the mortgage data and found the problem. Eissmann immediately took people to visit a large number of property buyers, and was surprised to find that many property buyers did not have a stable income, and the purchase funds were "supported by loans". Even the unemployed can get several loans from banks through intermediaries. It turns out that the big investment banks on Wall Street found through data research that American house prices have been rising steadily since 200 1, and they decided that even if they gave loans to some people with worrying credit status, they could repossess their houses even if they defaulted, with little risk. So they began to cooperate with banks and credit institutions to issue a large number of junk loans, and packaged these junk loans into mortgage-backed securities (MBS) and put them into the financial market. In order to seize the "big cake" of MBS rating business, rating companies illegally rated MBS products with high default rate as A-level. When almost all market participants were immersed in the bubble of false prosperity of real estate, eissmann put down his glass and faced reality. He immediately set up MBS short contracts with all his own funds, and the final income exceeded $654.38+0 billion.
final result
The case of eissmann caught the attention of American financial journalist michael lewis, who wrote the famous semi-documentary "TheBigShort". On the title page of the book, there is a sentence written by lev tolstoy: "If a person does not form any preconceptions, even if he is stupid, he can understand the most difficult problems. However, if a person firmly believes that he already knows the problem in front of him and has no doubt, then even if he is smart, he can't understand the simplest thing. " Yes, for investors, bearishness requires not only solid technical ability, but also a clear mind. Only by looking at the market objectively and impartially can we complete a wonderful short position.